Much of the focus in the aftermarket today is on standardizing the means of communicating product information between trading partners such as Product Information, Application Data, Images and Price Files. One would think this would be a relatively easy thing to do. But consider the following:
Everyday in North America a new product is released by a manufacturer. Product descriptions, images, material safety data sheets are all sent to stores, and inventory is shipped. But the product price is not in the electronic file that is sent, and therefore the stock sits on the shelf without a price, and remains unsold because it is not visible in the Point of Sale system. How can this be?
The most complex element of product information – Pricing – is the most overlooked functional feature in most of the major PIM systems today – with the exception of the Pricedex AutoPIM Pro system. And yet, accurate, timely pricing is crucial to sales success and profitability.
Pricing is not just simply about having a price in a file or on a Price Sheet, however. Pricing is the one element in a PIM strategy that touches almost every internal and external process – from initial new product introduction analysis, including researching competitors and sourcing suppliers; to procurement and manufacturing, and the control of changing input costs; to customer relationship management, and the management of contractual arrangements, rebates and promotions.
And it doesn’t end there. Publishing systems, the web, e-commerce, and business transaction systems all rely on pricing. Perhaps the complexity of it all is what keeps many of the PIM vendors from focusing on its importance in a PIM solution.
As if to support this, a recent Aberdeen Group study of internal data management issues in the retail sector found that only 11% of retailers are looking at business intelligence data on a near-real time basis; in addition, a full 42% of retailers were still using spreadsheets to manage their business intelligence data, despite recognizing that such a practice is inefficient.
In a properly planned PIM strategy, leveraging access to customer and sales information while incorporating Pricing Management along with Product and Part Management would eliminate those spreadsheet processes, permit visibility into near real-time business information, and enable informed, accurate business intelligence decisions to be executed.
And as pricing can also affect the corporate financial statements, it is also an element that comes under Sarbanes-Oxley scrutiny, for which compliance can be, without a good PIM system with Pricing Management capability, a costly, time- and resource-consuming venture.
Pricing Management incorporates all the processes, methods, analysis, stages, final data, and history required to support all the variants and conditions by which a price can be calculated for a transaction with a customer. It also includes the means by which that information is conveyed and disseminated through the internal business transaction chain, and the external supply and sell chains.
Being able to leverage part and product information, along with pricing information, within a PIM system enables a company to rapidly execute product strategies and promotions, react to changing market conditions, and interact with its customers with higher value-added processes which can create disciplined preference to conduct business.
Companies using pricing management systems drive millions of dollars of lost opportunity, margin leakage, customer support and publishing costs out of their operations, and are able to augment revenue by getting the right product, at the right price, to the market at the right time.
A pricing management system, incorporated in a PIM system, enables companies to maintain important auditing histories of part and price changes, and promotions and rebates. It also puts them in a position to distribute knowledge on a near real-time basis throughout their enterprise to improve business decision-making. And, they can even monitor such things as how a customer is performing in sales against its contract pricing or its rebate forecasts, and which of the company’s salespeople are optimizing sales and margins, and much more.
In fact, the combined cost savings, margin and revenue growth that some companies report in implementing pricing management more than pays for the entire PIM system implementation and data cleansing effort in under a year. It also eliminates all the spreadsheets the pricers have been managing and keeps the auditors satisfied and companies compliant with legislated compliance requirements.